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A N N UA L

R E P O R T

2015

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o b e t h e p r e f e r r e d s u p p l i e r o f b r a n d e d

F M C G a n d s t o c k f e e d p r o d u c t s i n

s u b - S a h a r a n A f r i c a

CONTENTSVISION

ROSETTA

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F I N A N C I A L H I G H L I G H S G R O U P S R U C U R E

2015 2014 2013 2012 2011

Volumes mt’000 494 538 500 414 352

Revenue US$’000 314,407 343,518 309,320 244,063 201,170

Prot from operating activities US$’000 17,608 22,621 18,439 11,053 7,032

Prot after tax for the year US$’000 12,736 16,783 13,939 7,904 5,097

Prots attributable to equity holders of the parent US$’000 12,736 16,783 13, 939 7,899 4,971

Basic earnings per share USc’s 18.62 24.54 20.38 11.55 7.27

Net asset value per share USc’s 118 107 89 73 64

Market value per share USc’s 300 215 245 112 95

Shares in issue at year end 000’s 68,400 68,400 68,400 68,400 68,399

National Foods Limited

(formerly National Foods Operations Limited

and Meadow Milling Company)

Flour and maize milling. Prepacking and sale of dry

groceries. Manufacturing of stockfeeds, vitamin and

mineral premixes for stockfeed applications and

edible oils.

Principal operating company

National Foods Properties Limited

(formerly National Foods Limited)

Property owning company

Botswana Milling and Produce

Company (Proprietary) Limited

Investment company

NF Transport Bulawayo

(Private) Limited

Dormant

Rice Mills ( Private) Limited

Dormant

Natpak Zimbabwe (Private) Limited

Dormant

Palte-Harris (Private) Limited

Dormant

Red Seal Manufacturers

(Proprietary) Limited

Property owning company

Speciality Animal Feed Company Limited

Dormant

Bakery Products (Private) Limited

Dormant

Harris Maize Milling and Produce Company

(Private) Limited

Dormant

100% 100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

V A L U E A D D E D S A E M E N

2015 2014

Value created: US$000 US$000

Revenue 314,407 343,518

Other Income 1,371 1,846

Suppliers for materials and services (276,741) (299,504)

Total wealth created 39,037 45,860

Distributed as follows:

Employees 15,735 16,392

Government 7,656 9,558

Income tax 4,418 4,846

PAYE 3,139 4,596Other taxes 99 116

Providers of capital 6,024 4,980

Dividends paid to shareholders 5,670 4,104

Net Interest paid on borrowings 354 876

Reinvested in the Group to maintain and develop operations 9,622 14,930

Depreciation 2,556 2,251

Retained income 7,066 12,679

Total wealth distributed and reinvested in the Group 3 9,03 7 4 5,860

For the year ended 30 June 2015

Value added is a measure of the wealth the Group has been able to create in its operations by adding value to

the cost of raw materials, products and ser vices purchased. The statement summarises the total wealth created

and shows how it was shared by employees and other parties who contributed to the Group’s operations. The

calculation takes into account the amount retained and reinvested in the Group for the replacement of assets and

further development of operations.

FY2015

FY2014

Employees

Government

Providers of Capital

Reinvested in the Group

to maintain and develop

operations

40

20

15

25

%

36

2111

32

%

5

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N a t i o n a l F o o d s H o l d i n g s L i m i t e d

B O A R D O F D I R E C O R S. Moyo ChairmanM.Lashbrook* Managing DirectorN. BrimacombeN. DoyleA. FourieL. Murimwa* Finance Director

J. Schonken

C O M P A N Y S E C R E A R Y

L. Howes

A U D I C O M M I E EJ. Schonken ChairmanN. Doyle

. Moyo N. Brimacombe Alternate MemberA. Fourie Alternate Member

R E M U N E R A I O N C O M M I E EA. Fourie ChairmanN. BrimacombeN. Doyle Alternate Member

R A N S F E R S E C R E A R I E SFirst ransfer Secretaries (Private) Limited

P.O. Box 11, Harare.

R E G I S E R E D O F F I C EGloria House10 Stirling Road,WorkingtonP.O. Box 269, Harare.

P R I N C I P A L B A N K E R SBarclays Bank Of Zimbabwe LimitedCBZ Limited

A U D I O R SErnst & YoungAngwa City Cnr K. Nkrumah Avenue/J.Nyerere Way P.O. Box 62, Harare.

*Executive Directors

W e a r e t h e r e s u l t o f o u r h a r d w o r k . O u r p a s s i o n

f o r w h a t w e d o m a k e s u s p i o n e e r s i n o u r s e c t o r .

L E G A LWintertons

Dube, Manikai & Hwacha

P r i n c i p a l O p e r a t i n g C o m p a n y Te principal operating company of National Foods HoldingsLimited is National Foods Limited, which is incorporated in andoperates throughout Zimbabwe via a system of factories, depots

and agencies.

N A I O N A L F O O D SL I M I E D D I R E C O R S AS A 30 JUNE 2015M. Lashbrook * Managing Director

L. Murimwa* Finance DirectorJ. Schonken

N. Brimacombe

G R O U P E X E C U I V E C O M M I E EM. Lashbrook Managing DirectorL. Murimwa Finance DirectorJ. Gapu Sales and Distribution ExecutiveW. Chimweta Group Marketing ExecutiveL. Howes Group Legal ExecutiveR. Mann Group Operations ExecutiveC. Spong Group I ExecutiveR. Usayi Group Human Resources Executive

M A N A G I N G E X E C U I V E S M. Chawanda Managing Executive - Flour MillingL. Ngwenya Managing Executive - StockfeedsC. Nheta Managing Executive - Maize MillingG. Nyakwende Managing Executive - DepotsC. Spong Managing Executive - MCG

D I R E C O R A E A N D A D M I N I S R A I O N

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I n t r o d u c t i o n

The Group recorded a disappointing

performance for the nancial year under

review, posting prot before tax of $17.3

million which was 20.7% below the prior

year. The results were heavily inuenced

by the poor performance of the Maize

division, where volumes declined 39.3%

against the previous nancial year as

a result of a signicantly improved

2013-14 local maize harvest. Excluding

the Maize division, revenue for the year

grew 5.4%, being driven in the main by

a strong performance from the Flour

division.

During the year, consumer disposable

income declined further in the face

of reducing formal employment.

In addition, deationary pressures

continued, with the consumer price

index recording food and non-alcoholic

beverage prices deating at 3.3% for

the year to June 2015. This, together

with a devaluing Rand and the entry of

several new players further heightened

competitive pressure.

C H A I R M A N ' S S A E M E N

O D D M O Y O C H A I R M A N

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O v e r v i e w o f F i n a n c i a l

P e r f o m a n c e

Overall volumes declined 8.1% during the period,

with gross margin at against the prior year. Total

operating costs declined by 6.7% versus last year

as the various efciency improvement and cost

containment measures began to bear fruit. A

strategic decision was taken to substantially increase

marketing investment to support our brands with the

objective of further entrenching the category leading

position that most of our brands hold.

The Group generated $6 million of free cash

during the period. Capital expenditure for the year

amounted to $5.7 million as effor ts to progressively

upgrade the Group’s operations continued.

The bulk of this expenditure was applied to the

Harare and Bulawayo our mills, where $2.6 million

was invested. The disposal of non-core properties

and assets continued during the year and is now

largely complete. At year end the group showed

a net-cash surplus of $5.3 million leaving it well-

resourced to fund its growth ambitions.

F l o u r M i l l i n g

This division delivered an excellent performance,

with volumes increasing 11.2% compared to the

previous nancial year. Volume growth was driven by

the bakers’ our channel, while in the prepack our

segment Gloria and Red Seal continued to perform

strongly on shelf. Towards year end Snow White

Cake Flour was introduced as a premium self-raising

our variant and was well received by the consumer.

This year marked the rst year of an intensive

three-year program to refurbish both the Harare

and Bulawayo our mills to international standards.

The program is on track and progressing well, with

capital expenditure of $4.7 million planned for the

coming nancial year. Operating performance of the

our mills continues to improve signicantly on the

back of this investment.

M a i z e M i l l i n g

The Maize division had a very disappointing year on

the back of reduced volumes following the good

harvest which resulted in increased household

retentions of raw maize. Whilst volumes achieved

were disappointing they were largely in line with

similar size harvests in previous years.

The current maize harvest has been poor and

signicant volumes of raw maize will need to be

imported. Our management team continues to work

closely with the authorities and our major suppliers

to ensure adequate raw material supply over the

coming year.

S t o c k f e e d s

The Stockfeeds division had a subdued year with

volumes declining 5.5% compared to the previous

nancial year; this was driven by a disappointing

performance in the small scale poultry category

and the fact that a number of NGO-based livestock

support programs were discontinued following a

good 2013-14 season.

From an industry perspective livestock producers

across all sectors have faced constrained viability

on the back of muted consumer demand, cheap

protein imports and high grain prices. Despite these

challenges, growth in the small scale poultry sector

maintained its impressive momentum, with efforts to

better serve this vibrant market sector being further

intensied.

M C G

This division continues to make an increasingly

important contribution to the Group, with volumes

increasing 12.8% compared to the previous nancial

year.

Volume growth was largely driven by the oil and

pasta categories, with important contribution from

Red Seal oil and the introduction of Better Buy pasta.

Many of the categories within this business have high

growth potential and we continue to work closely

with our customers and consumers in developing

exciting and innovative propositions by category.

The product portfolio in this division has been

re-focused in order to drive growth in the high

potential categories, among them increased levels of

consumption of rice and pasta.

C o n t r a c t F a r m i n g

The Group continues to support local farming, with

4,400 hectares of maize and soya beans having been

cropped during the recently ended summer season

and a further 4,200 hectares of wheat sown in the

current winter wheat season.

C o r p o r a t e S o c i a l

R e s p o n s i b i l i t y ( C S R )

The Group continued with its CS R programs during

the year. These are aimed at assisting vulnerable

groups, disadvantaged communities as well as

assisting various livestock and wildlife initiatives

around the country.

F u t u r e P r o s p e c t s

With the on-going investments in the Flour division

the manufacturing facilities are now largely operating

to expectation. In light of the subdued trading

environment it is imperative that we continue to

optimize the cost base of the business and this will

be a key priority in the year ahead. Our overarching

objective remains to create businesses that can

compete with the best in the region. To this end,

a further $7.4 million of capital expenditure will be

invested in the existing businesses in the year ahead.

The Board has approved two new projects during

the year, both of which will be implemented provided

the necessary regulatory approvals are received.

One of these investments represents an opportunity

to value-add existing products while the second is anew category entry.

Both investments are aligned to the company’s

long term strategy and offer opportunities to better

leverage our existing service platform. The active

pursuit of further growth opportunities remains a key

theme in the year ahead.

D i v i d e n d

The Board has declared a nal dividend of 4,65c

per share (bringing the total dividend for the year to

7,76c per share) payable on or about 10th November

2015 to shareholders registered in the books of the

Company at noon on 9th October 2015. The transfer

books and register of members will be closed from

noon on 9th October 2015 up to and including 11th

October 2015.

A c k n o w l e d g m e n t a n d

A p p r e c i a t i o n

I would like to thank management and s taff sincerely

for their commitment during what has been a

challenging year for the Group.

Finally, I wish to thank my fellow board members for

their on-going support and counsel.

Todd Moyo

Chairman

C H A I R M A N ' S S A E M E N C O N I N U E D C H A I R M A N ' S S A E M E N C O N I N U E D

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Te National Foods Group of companies

subscribes to the principles of discipline,independence, accountability, transparency,responsibility, integrity, fairness and social

responsibility, identified as the primarycharacteristics of good governance in the

Code of Corporate Practices and Conduct,contained within the King III Report on

Corporate Governance and the CombinedCode on Corporate Governance.

I n t r o d u c t i o n

The primary objective of any system of

corporate governance is to ensure that

directors and managers, to whom the

running of large corporations has been

entrusted by the shareholders, carry

out their responsibilities faithfully and

effectively, placing the interests of the

corporation and society ahead of their

own. This process is facilitated through

the establishment of appropriate

reporting and control structures

within the organisation. The Board

believes that the Group’s governance

practices are strong and that in all

material respects, the Group conforms

to the principles of good Corporate

Governance and is committed to

ensuring that its principles continue to

be an integral part of the way in which

the group’s business is conducted.

D i r e c t o r a t e a n d

E x e c u t i v e M a n a g e m e n t

The Boards of Directors of theHolding Company and of the Principal

Operating Company retain full and

effective control over the Group. The

Boards meet regularly, no less than

four times a year to review strategy,

planning, operational performance,

acquisitions and disposals, stakeholder

communications and other material

matters relating to performance of

executive management.

The majority of Directors of the Holding

Company are non-executive bringing

objective judgement to bear on issues

of strategy and performance. The

Group Chairman is an independent non-

C O R P O R A E G O V E R N A N C E

executive Director. Managerial levels of authority

have been established for capital expenditure

projects and the acquisition and disposal of assets .

However, decisions of a material nature are taken by

the Board of Directors and senior management, who

constitute key management and whose remuneration

is disclosed in Note 18.7. The directors have access

to the advice and services of th e company secretary

who is responsible to the Board for en suring

compliance with procedures and regulations.

Directors are entitled to seek independent

professional advice about the affairs of the Group, at

the company’s expense, if they believe that course of

action would be in the best interest of the Group.

D i r e c t o r a t e a n d E x e c u t i v e M a n a g e m e n t

The Directors of the National Foods H oldings Group

are responsible for preparing nancial statements

and other information presented in the annual report

in a manner that fairly presents the state of affairs

and results of the operations of the company and

the Group. The external auditors are respo nsible

for carrying out an indepe ndent examination of the

nancial statements in accordance with International

Standards on Auditing and reporting their ndings

thereon. The annual nancial statements contained

in this report have been prepared in accordance with

International Financial Reporting Standards. They are

based on appropriate accounting policies and are

supported by reasonable and prudent judgements

and estimates. The directors have no reason to

believe that the Group’s operations will not continue

as a going concern in the year ahead.

A u d i t C o m m i t t e e

The Group has an audit committee comprising

representation by non-executive directors and

is chaired by a non-executive director. As at 30

June 2015 the committee comprised J.Schonken

(Chairman), T. Moyo, N. Doyle, N. Brimacombe

(Alternate) and A . Fourie (Alternate). The external

auditors have unrestricted access to this committee.

The audit committee reviews the effectiveness of

internal controls in the Group with reference to the

ndings of both the internal and external auditors.

Other areas covered include the review of important

accounting issues, including specic disclosures in

the nancial statements and a review of the major

audit recommendations.

R i s k M a n a g e m e n t C o m m i t t e e

The directors are accountable for the process of

risk management and for establishing appropriate

risk and control policies and to ensure that these

are communicated throughout the Group. Executive

managers are responsible for the identication

and evaluation of key risks applicable to their

areas of business. The Group has established a risk

management committee which is responsible for

overseeing and reporting on the overall group risk.

This provides an on-going process for identifying,

evaluating and managing the signicant risks faced

by the Group. This committee reports to the Board

on key areas of risk that have bee n identied in the

Group.

I n t e r n a l C o n t r o l

The Group maintains internal controls and systems

designed to provide reasonable assurance as to the

integrity and reliability of the nancial statements

and to adequately safeguard, verify and maintain

accountability for its assets. Such controls are

based on established policies and procedures

and are implemented by trained personnel with

an appropriate segregation of duties. The internal

audit function operates under the direction of the

Group Audit Committee, which approves the scope

of the work to be performed. Signicant ndings

are reported to both executive management and

the audit committee. Corrective action is taken to

address internal control deciencies identied in

the execution of the work. Nothing has come to the

attention of the Directors that indicates any material

breakdown in the functioning of the key internal

controls and systems during the period under review.

The Group has comprehensive risk and loss control

procedures in place, which form an integral part of a

sophisticated third party insurance programme.

D i r e c t o r s ’ a n d E x e c u t i v e

R e m u n e r a t i o n

R e m u n e r a t i o n c o m m i t t e e

The remuneration committee has been delegated

by the board with the responsibility of determining

the remuneration of the executive directors and

other senior management members. The chairman

of the committee is obliged to report to the board

on its deliberations. The committee is comprised of

A. Fourie (Chairman), N. Brimacombe and N. P. Doyle

(Alternate).

C O R P O R A E G O V E R N A N C E C O N I N U E D


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R e m u n e r a t i o n P o l i c y

The remuneration policy is formulated to attract,

retain and motivate top quality people in the best

interests of shareholders, and is based upon the

following principles:

• Remuneration arrangements will be designed to

support National Foods Holdings Group’s business

strategy, vision and to conform to best practices.

• Total rewards will be set at levels that are

competitive within the context of the relevant areas

of responsibility and the industry in which the

Group operates.

C o m p o s i t i o n o f E x e c u t i v e

R e m u n e r a t i o n

The remuneration packages of executive directors

comprise an annual salary, benets and a short term

incentive scheme.

M a n a g e m e n t R e p o r t i n g

There are comprehensive management reporting

disciplines in place which include the preparation

of annual budgets by all operating units . Individual

budgets are approved by the Principal Operating

Company board of directors, while the Group budget

is reviewed by the directors of the Holding Company.

Monthly results and the nancial status of operating

units are reported against approved budgets and

compared to the prior year. Prot projections and

cash ow forecasts are updated half yearly, while

working capital and borrowing levels are monitored

on an on-going basis.

S t r a t e g i c P l a n n i n g P r o c e s s

In line with its mission to build a world-class busine ss,

the overall strategy for National Foods Holdings is

clearly focused. Annual strategic plans are compiled

at both Group and business unit level, with detailed

plans for action and allocated responsibilities.

Progress is reviewed regularly.

E t h i c s

Directors and employees are required to observe

the highest ethical standards, ensuring that the

business practices are conducted in a manne r which,

in all reasonable circumstances is beyond reproach.

In line with the Zimbabwe Stock Exchange Listing

Requirements, the Group operates a closed period

prior to the publication of its interim and year end

nancial results during which period directors,

ofcers and employees may not deal in the shares of

the Holding Company. Where appropriate, this is also

extended to include other sensitive periods.

E q u a l O p p o r t u n i t y

The Group is committed to providing equal

opportunities for its employees regardless of race,

tribe, place of origin, political opinion, colour, creed

or gender.

C O R P O R A E G O V E R N A N C E C O N I N U E D

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R E V I E W O F F I N A N C I A L S

C O N S O L I D A E D S A E M E N O F P R O F I A N D L O S S A N D O H E RC O M P R E H E N S I V E I N C O M E

Year ended30 June 2015

US$000


US$000


US$000


US$000


US$000

Revenue 314,407 343,518 309,320 244,063 201,170

Prot from before interest and tax 17,608 22,621 18,439 11,053 7,032

Net nancing costs (355) (876) (1,190) (345) (551)

- nance expense (1,154) (1,505) (1,479) (1,158) (1,300)

- nance income 799 629 289 813 749

Share of associate’s prot - - - - 823

Prot before tax 1 7,253 2 1, 745 17,249 10,708 7,304

Taxation (4,517) (4,962) (3,310) (2,804) (2,207)

Prot for the year 12,736 16,783 13,939 7,904 5 ,097

Discontinued Operations - - - - (73)

Prot for the year 12,736 16,783 13,939 7,904 5,024

To ta l c omp re he ns iv e i nc om e f or t he y ea r 1 2, 73 4 1 6, 78 3 13 ,9 37 7, 90 0 5 ,0 22

As at30 June 2015

US$000

As at30 June 2014

US$000

As at30 June 2013

US$000

As at30 June 2012

US$000

As at30 June 2011

US$000

Assets

Property, plant and equipment 40,267 37,186 37,925 35,851 33,266

Investments in associate companies - - - - 813

Other non-current nancial assets 120 122 120 277 64

Other current assets 74,402 68,758 71,993 41,770 41,174

Cash and short term deposits 8,746 12,672 4,106 10,619 5,921

Assets classieds as held for sale 157 1,351 - - 748

Total Assets 123,692 120,089 114,144 88,517 81,986

Equity and Liabilities

Equity 80,571 73,507 60,828 50,011 43,601

Deferred tax 7,448 7,606 7,450 8,074 8,190

Bank overdrafts 1,482 7,221 - 2,265 2,033

Other current liabilities 34,183 31,687 45,866 28,167 28,162

Liabilities relating to assests held for sale 8 68 - - -

Total equity and Liabilities 123,692 1 20,089 114,144 88,517 81,986

Year ended 30 June 2015

US$000


US$000


US$000


US$000


US$000

Net cash inows/(outows) from operating activities 10, 552 2 5, 32 3 (18,408) 12,911 4,109

Investing activities

- purchase of property, plant and equipment (5,688) (3,640) (6,086) (4,764) (2,217)

- other investing activities 1,893 3,115 2,875 2,011 1,245

Net cash outows from investing activities (3,795) (525) (3,211) (2,753) (972)

Net cash inows/(outows) before nancingactivities

6.757 24,798 (21,619) 10,158 3,137

Financing activities (4,944) (23,454) 17,371 (5,692) (6,333)

Increase/(decrease) in cash and c ash equivalents 1,813 1,344 (4,248) 4,466 (3,196)

C O N S O L I D A E D S A E M E N O F F I N A N C I A L P O S I I O N

C O N S O L I D A E D S A E M E N O F C A S H F L O W S

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R A I O S A N D S A I S I C S


US$000


US$000


US$000


US$000


US$000

Protability

Operating margin % 6% 7% 6% 5% 3%

Return on total assets % 14% 19% 18% 13% 9%

Return on equity % 17% 28% 28% 18% 13%

Effective tax rate % 26% 23% 19% 26% 30%

Growth

(Decrease)/increase in revenue % (8%) 11% 26% 16% 25%

(Decrease)/increase in operating prot % (22%) 23% 67% 57% 392%

Productivity

Asset turnover times 2.54 2.86 3.34 2.85 3.00

Solvency and liquidity

Current ratio times 2.33 2.09 1.66 1.72 1.56

Ineterst cover times 49.74 25.83 15.50 32.03 12.76

Net debt to shareholders' funds % Nil Nil 27% Nil 3%

Total liabilities to shareholders' funds % 54% 63% 88% 77% 88%

Employee statistics

Number of employees ave 996 954 966 918 924

Revenue per employee US$ 315,610 360,082 320,027 265,864 217,716

Operating prot per employee US$ 17,679 23,712 22,820 12,040 7,611

Share performance

Number of shares issued 000's 68,400 68,400 68,400 68,400 68,399

Weighted average shares in issue 000's 68,400 68,400 68,400 68,399 68,399

Basic earnings per share US cents 18.62 24.54 20.38 11.55 7.27

Diluted earnings per share US cents 18.62 24.54 20.38 11.55 7.27

Dividend per share US cents 7.76 8.18 6.00 2.75 0.7

Dividend cover times 2.40 3.00 3.40 4.19 4.74

Dividend yield % 3% 4% 2% 2% 1%

Price earnings ratio times 16.11 8.76 12.02 9.70 13.07

Net asset value per share US cents 117.79 107.47 88.93 73.12 63.75

Market capitalisation $'000 205,200 147,060 167,580 76,608 64,979

Market price per share

High US cents 340 250 270 125 101

Low US cents 195 195 140 80 81

Price - year end US cents 300 215 245 112 95

The following denitions relate to terms used in this report.

Asset turnover Revenue divided by total assets at the end of the nancial period.Average Opening balance plus closing balance divided by two.

Current ratio Ratio of current assets to current liabilities.

Dividend cover Basic earnings per share divided by declared dividend per share.

Dividend yield Dividend per share as a percentage of market price at period end.

Interest cover Prot/Loss before interest and tax, divided by interest expense.Market capitalisation Market price at period end multiplied by number of shares in issue.

Net asset value per share Shareholders' funds at end of period divided by number of shares in issue at that date.

Operating margin Prot/(los s) before interest and tax as a percentage of turnover.Price earnings ratio Market price at period end divided by earnings per share.

Return on equity Prot/(loss) after tax for the year as a percentage of opening shareholders' funds.Return on total assets Prot/Loss before interest and tax, as a percentage of average total assets.Shareholders' funds Issued capital plus distributable and non-distributable reserves.Total liabilitie s Long term liabilities , current liabilities , bank overdrafts and acceptances .

S h a r e C a p i t a l During the year the authorised share capital

remained at 73 000 000 ordinary shares of (US)

1 cent each. No new shares were issued during the

year (2014:Nil) and the number of shares in issue

was 68 400 108 (2014:68 400 108).

N a t i o n a l F o o d s W o r k e r s r u s t

National Foods Workers Trust (Private) Limited

was established to provide a scheme for worker

participation in both the equity and prots of the

company. Through donations by the Company to

the Trust, the Trust acquired a 9.85% sh areholding in

National Foods Holdings Limited. Dividends received

through its shareholding are administered by a board

of Trustees for the benet of workers under grades

“A”, “B” and “C” of the Paterson Job grading s ystem.

B o r r o w i n g P o w e r sIn terms of the Articles of Association, the borrowing

powers of the company and its subsidiaries

(excluding inter-company borrowings) are limited in

aggregate to the nominal amount of the share capital

of the company plus the total free reser ves of the

company and its subsidiaries. The level of borrowings

throughout the year was adequately covered in this

respect.

R e s e r v e sMovements in reserves are sh own in the statement of

changes in equity.

D i v i d e n d sThe Board has declared a nal dividend of (US) 4.65

cents per share payable on or about 10 November

2015 to shareholders registered in the books of the

company by noon 9 October 2015. The transfer

books and register of members will be closed on 9th

October up to and including the 11th October 2015.

Together with the interim dividend of (U S) 3.11 centsper share, this nal dividend brings the total dividend

for the year to (US) 7.76 cents per share.

D i r e c t o r a t e

Messr J.Brooke resigned as Managing Director

of the Company effective 31 October 2014. The

Board thanks him for his hard work and dedication

throughout the years and wish him every success in

his future endeavours.

Messrs T.Moyo and N.Brimacombe retire by rotation

in terms of the Articles of Asso ciation of the

Company, and being eligible, offer themselves for

re-election. At a board meeting held on 4 November

2014, Mr J. Schonken and Mr M. Lashbrook were

appointed as Directors of the Company with effect

from 1 January 2015. In terms of the Articles of

Association of the Company they are required to

retire from the Board at the Annual Gen eral Meeting

and being eligible, offer themselves for re-election.

A u d i t o r s

Members will be asked to approve the remuneration

of Ernst & Young for the past au dit and to conrm

their reappointment for the ensuing year.

A n n u a l G e n e r a l M e e t i n g The forty-sixth Annual General Meeting of the

Company will be held at 08.30am on Wednesday

18th November 2015 at the registered ofce of the

Company 10 Stirling Road, Workington, Harare.

T.Moyo M.Lashbrook

Chairman Managing Director

14 October 2015

Te Directors have pleasure in presenting their report, together with the auditedconsolidated financial statements for the year ended 30 June 2015

D I R E C O R S ' R E P O R

2015 2014 2013 2012 2011

US$ US$ US$ US$ US$

Profit before tax 17,253,842 21,745,380 17,249,091 10,707,499 7,304,056

Tax (4,517,481) (4,961,918) (3,309,971) (2,803,839) (2,207,267)

Profit after tax 12,736,361 16,783,462 13,939,120 7,903,660 5,096,789

Total comprehensive income for the year 12,734,495 16,783,112 13,936,690 7,900,101 5,022,488

G R O U P F I N A N C I A L R E S U L S


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The Directors of the company are required by the

Companies Act to maintain adequate accounting

records and to prepare nancial statements that

present a true and fair view of the state of affairs

of the Company and the Group at the end of each

nancial year and of the prot and cash ows for

the period. In preparing the accompanying nancial

statements, International Financial Reporting

Standards have been followed. Suitable accounting

policies have been used and consistently applied, and

reasonable and prudent judgements and estimates

have been made.

The nancial statements have been prepared under

the historical cost convention, are in agreement with

the underlying books and records and have been

properly prepared in accordance with the accounting

policies set out in note 2 of the nancial statements,and comply with International Financial Reporting

Standards and the disclosure requirements of the

Companies Act (Chapter 24:03) and the relevant

regulations made thereunder.

The principal accounting policies of the Group are

consistent with those applied in the previous year

and conform to International Financial Reporting

Standards (IFRS). The Directors have satised

themselves that the Group is in a sound nancial

position and has adequate resources to continue

in operational existence for the foreseeable future.

Accordingly they are satised that it is appropriate

to adopt the going concern basis in preparing the

nancial statements.

The Board recognises and acknowledges its

responsibility for the Group’s systems of internal

nancial control. The Group maintains internal

controls and systems that are designed to safeguard

its assets, prevent and detect errors and fraud and

ensure the completeness and accuracy of the its

records. The Group’s Audit Committee has met the

external auditors to discuss their reports on the

results of their work, which include assessments of

relative strengths and weaknesses of key control

areas. Whilst in a growing group of the size,

complexity and diversity of National Foods it may be

expected that occasional breakdowns in established

control processes may occur, no breakdowns

involving material loss have been reported to the

Directors in respect of the period under review.

The nancial statements for the year ended 30 June

2015, which appear on pages 23 to 54 have been

approved by the Board of Directors and are signed on

its behalf by:

T.Moyo M.Lashbrook

Chairman Managing Director

Harare

14 October 2015

S A E M E N O F D I R E C O R S ' R E S P O N S I B I L I Y

A n n u a l R e p o r t 2 0 1 5

2 1

A n n u a l R e p o r t 2 0 1 5

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF

NATIONAL FOODS HOLDINGS LIMITED

Report on the consolidated nancial statements

We have audited the accompanying consolidated nancial statements of National Foods Holdings Limited as set out on

pages 23 to 54, which comprise the consolidated statement of nancial position as at 30 June 2015, t he consolidated

statement of prot or loss and comprehensive income, the consolidated statement of changes in equity and the

consolidated statement of cash ows for the year t hen ended, and the notes to the nancial statements, which include a

summary of signicant accounting policies and other explanatory information.

Directors’ responsibility for the consolidated nancial statements

The Directors are responsible for the preparation and fair representation of these consolidated nancial statements in

accordance with International Financial Reporting Standards and in the manner required by the Companies Act (Chapter

24:03), and for such internal control as the Directors determine is necessary to enable the preparation of consolidated

nancial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s responsibility

Our responsibility is to express an opinion on thes e consolidated nancial statements based on our audit. We conducted

our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical

requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated nancial

statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated

nancial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks

of material misstatement of the consolidated nancial statements, whethe r due to fraud or error. In making those risk

assessments, the auditor considers internal control relevant to the entity’s preparation and f air presentation of the

consolidated nancial statements in order to design audit procedures that are appropriate for the circumstances, but

not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes

evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by t he

Directors, as well as evaluating the overall present ation of the consolidated nancial statements.

We believe that the audit evidence we have obtained is sufcient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the consolidated nancial statements present fairly, in all material respects, the nancial position of

National Foods Holdings Limited as at 30 June 2015, and of its nancial performance and cash ows for the year then

ended in accordance with International Financial Reporting Standards.

Report on other legal and regulatory requirements

In our opinion, the consolidated nancial statements have, in all material respects, been properly prepared in compliance

with the disclosure requirements of the Companies Act (Chapter 24:03).

ERNST & YOUNG

CHARTERED ACCOUNTANTS (ZIMBABWE)

REGISTERED PUBLIC AUDITORS

Harare

16 October 2015

Ernst & Young

Chartered Accountants (Zimbabwe)

Registered Public Auditors

Angwa City

Cnr Julius Nyerere Way /

Kwame Nkrumah Avenue

P.O. Box 62 or 702

Harare

Zimbabwe

Tel: +263 4 750905 - 14 or 750979-83

Fax: +263 4 750707 or 773842

Email: [email protected]

www.ey.com

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C O N S O L I D A E D S A E M E N O F P R O F I O R L O S S A N D O H E R C O M P R E H E N S I V E I N C O M E

F O R H E Y E A R E N D E D 3 0 J U N E 2 0 1 5

Notes 2015 2014

US$ US$

Revenue 4 314,406,934 343,517,968

Cost of sales (243,563,395) (264,414,059)

Gross prot 70,843,539 79,103,909

Other income 5.1 1,370,523 1,846,161

Selling and distribution expenses (15,057,279) (15,427,029)

Employee benets expenses (18,872,438) (20,987,743)

Administrative expenses (18,120,301) (19,663,004)

Depreciation 5.3 (2,556,218) (2,251,180)

Prot before interest and tax 17,607,826 22,621,114

Finance income 5.4 798,642 628,676

Finance costs 5.4 (1,152,626) (1,504,410)

Prot before tax 5 17,253,842 21,745,380

Income tax expense 6.1 (4,517,481) (4,961,918)

Prot for the year 12,736,361 16,783,462

Other comprehensive income

- to be recycled to prot and loss at a future point in time

Exchange differences on translation of foreign operations (1,866) (350)

Total comprehensive income for the year 12,734,495 16,783,112

Prot for the year attributable to equity holders of the parent 12,736,361 16,783,462

Total comprehensive income for the year attributable to equity holders ofthe parent

12,734,495 16,783,112

Earnings per share

Basic and diluted 7 18.62 cents 24.54 cents

Headline 7 17.82 cents 22.54 cents

A n n u a l R e p o r t 2 0 1 5

2 3 2 3

A n n u a l R e p o r t 2 0 1 5

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T. Moyo

Chairman

Harare

14 October 2015

M. Lashbrook

Managing Director

C O N S O L I D A E D S A E M E N O F F I N A N C I A L P O S I I O N

A S A 3 0 J U N E 2 0 1 5

Notes 2015 2014

US$ US$

ASSETS

Non-current assets

Property, plant and equipment 8 40,266,147 37,185,421

Other nancial assets 10.1 119,845 121,912

40,385,992 37,307,333

Current assets

Other nancial assets 10.1 2,304 -

Inventories 11 45,077,388 42,381,257

Trade and other receivables 12 29,322,434 26,376,781

Cash & cash equivalents 17.4 8,746,079 12,672,119

83,148,205 81,430,157

Assets classied as held for sale 9 157,431 1,351,457

83,305,636 82,781,614

Total assets 123,691,628 120,088,947

EQUITY AND LIABILITIES

Equity

Issued share capital 13.1 684,001 684,001

Non-distributable reserves 13.2 (9,595) (7,729)

Distributable reserves 1 3. 3 79 ,896, 455 7 2, 830, 463

Total equity 80,570,861 73,506,735

Non-current liabilities

Deferred tax liability 6.4 7,447,903 7,606,225

7,447,903 7,606,225

Current liabilities

Trade and other payables 15 30,761,603 29,475,784

Bank overdrafts 10.2 1,482,470 7,221,460

Borrowings 10.2 1,942,358 1,215,740

Provisions 16 1,279,298 758,330

Income tax payable 6.3 199,263 237,100

35,664,992 38,908,414

Liabilities relating to assets held for sale 9 7,872 67,573

35,672,864 38,975,987

Total equity and liabilities 123,691,628 120,088,947

C O N S O L I D A E D S A E M E N O F C H A N G E S I N E Q U I Y


Issued Share

Capital

Non-

Distributable

Reserves

Distributable

Reserves Total

US$ US$ US$ US$

Notes 13.1 13.2 13.3

Balance at 30 June 2013 684,001 24,676,429 35,467,199 60,827,629

Prot for the year - - 16,783,462 16,783,462

Other comprehensive income - (350) - (350)

Total comprehensive income - (350 ) 16,7 83, 462 16,783,112

Dividends paid - Note 14 - - (4,104,006) (4,104,006)

Transfer of functional currency conversion reserve

- Note 13.2 - (24,683,808) 24,683,808 -

Balance at 30 June 2014 684,001 (7,729) 72,830,463 73,506,735

Prot for the year - - 12,736,361 12,736,361

Other comprehensive income - (1,866) - (1,866)

Total comprehensive income - ( 1, 866 ) 1 2,73 6, 361 12,734,495

Dividends paid - Note 14 - - (5,670,369) (5,670,369)

Balance at 30 June 2015 684,001 (9,595) 79,896,455 80,570,861


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N O E S O H E C O N S O L I D A E D F I N A N C I A L S A E M E N S

1 . C o r p o r a t e I n f o r m a t i o n

The Company and its subsidiaries are incorporated

in Zimbabwe except for Botswana Milling and

Produce Company (Proprietary) Limited and Red

Seal Manufacturers (Proprietary) Limited which

are incorporated in Botswana. Refer to Directorate

and Administration Section for additional corporate

information.

The Group’s main activities comprise of the milling

of our and maize, manufacture of stockfeeds and

the packaging and sale of other general household

goods.

The consolidated nancial statements of National

Foods Holdings Limited for the year ended 30 June

2015 were authorised for issue in accordance with a

resolution of the Directors on 14 October 2015.

2 . S u m m a r y O f S i g n i f i c a n t

A c c o u n t i n g P o l i c i e s

2.1 Basis of Preparation

The consolidated nancial statements of the Group

have been prepared in accordance with International

Financial Reporting Standards (IFRS) as issued

by the International Accounting Standards Board

(IASB). The consolidated nancial statements

have been prepared on a historical cost basis. The

consolidated nancial statements are presented

in United States Dollars. All values are rounded to

the nearest dollar (US$), except when other wise

indicated.

2.2 Basis of consolidation

The consolidated nancial statements comprise the

nancial statements of the Group and its subsidiaries

as at 30 June 2015.

Control is achieved when the Group is exposed, or

has rights, to variable returns from its involvement

with the investee and has the ability to affect

those returns through its power over the investee.

Specically, the Group controls an investee if and

only if the Group has:

• Power over the investee (i.e. existing rights that

give it the current ability to direct the relevant

activities of the investee)

• Exposure, or rights, to variable returns from its

involvement with the investee, and

• The ability to use its power over the investee to

affect its returns.

When the Group has less than a majority of the

voting or similar rights of an investee, the Group

considers all relevant facts and circumstances in

assessing whether it has power over an investee,

including:

• The contractual arrangement with the other vote

holders of the investee.

• Rights arising from other contractual arrangements.

• The Group’s voting rights and potential voting

rights.

The Group re-assesses whether or not it controls

an investee if facts and circumstances indicate

that there are changes to one or more of the three

elements of control. Consolidation of a subsidiary

begins when the Group obtains control over the

subsidiary and ceases when the Group loses controlof the subsidiary. Assets, liabilities, income and

expenses of a subsidiary acquired or disposed of

during the year are included in the statement of

comprehensive income from the date the Group

gains control until the date the Group ceases to

control the subsidiary.

Prot or loss and each component of other

comprehensive income (OCI) are attributed to the

equity holders of the parent of the Group and to

the non-controlling interests, even if this results

in the non-controlling interests having a decit

balance. When necessary, adjustments are made

to the nancial statements of subsidiaries to bring

their accounting policies into line with the Group’s

accounting policies. All intra-group assets and

liabilities, equity, income, expenses and cash ows

relating to transactions between members of the

Group are eliminated in full on consolidation.

A change in the ownership interest of a subsidiary,

without a loss of control, is accounted for as an

equity transaction. If the Group loses control over a

subsidiary, it:

• Derecognises the assets (including goodwill) andliabilities of the subsidiary.

• Derecognises the carrying amount of any non-

controlling interest.

• Derecognises the cumulative translation differences

recorded in equity.

• Recognises the fair value of the consideration

received.

• Recognises the fair value of any investment

retained.

• Recognises any surplus or decit in prot or loss.

• Reclassies the parent’s share of components

previously recognised in other comprehensive

income to prot or loss or retained earn ings, as

appropriate.

C O N S O L I D A E D S A E M E N O F C A S H F L O W S


Notes 2015 2014

US$ US$

OPERATING ACTIVITIES

Cash generated from operations 17.1 21,717,288 25,262,193

Working capital changes 17.2 (6,037,487) 6,056,006

Operating cash ow 15,679,801 31,318,199

Interest received 798,642 628,676

Interest paid ( 1, 152,626) ( 1,504,410)

Income tax paid 17.3 (4,773,341) (5,118,985)

Net cash ows from operating activities 10,552,476 25,323,480

INVESTING ACTIVITIES

Purchase of property, plant and equipment to expand operations (4,573,931) ( 1,798,919)

Purchase of property, plant and equipment to maintain operations ( 1 ,1 14 ,556) ( 1,840,622)

Purchase of nancial instruments and other investments (6,230) -

Proceeds on disposal of property, plant and equipment 105,990 2,258,529

Proceeds on disposal of assets held for sale 1,786,959 -

Proceeds on disposal of nancial instruments 5,993 856,394

Net cash ows from investing activities (3,795,775) (524,618)

FINANCING ACTIVITIES

Proceeds from borrowings 8,726,618 11,456,985

Repayment of borrowings (8,000,000) (30,807,478)

Dividends paid (5,670,369) (4,104,006)

Net cash ows from nancing activities (4,943,751) (23,454,499)

Increase in cash and cash equivalents 1,812,950 1,344,363

Cash and cash equivalents at beginning of the year 5,450,659 4,106,296

Cash and cash equivalents at the end of the year 17.4 7,263,609 5,450,659


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2.3 Changes in accounting policy and disclosures

The accounting policies adopted are consistent with

those of the previous nancial year. Of the new

pronouncements and amendments to the standards

that became effective for the Group with ef fect

from 1 July 2014 the Group was impacted by an

amendment to IFRS 8 which requires disclosure of

the judgements made by management in applying

the aggregation criteria in IFRS8.12 as disclosed

in note 22. Management has in the current year

separately disclosed the down packing segment

which was previously part of the milling and

manufacturing segment. Comparatives have been

adjusted accordingly.

The remaining pronouncements and amendments

which became effective on 1 July 2014 did not have a

material effect on the Group's nancial statements.

2.4 Standards issued but not yet effective

Standards issued but not yet effective up to the

date of issuance of the Group’s nancial statements

are listed below. This listing of standards and

interpretations issued are those that the Group

reasonably expects to have an impact on disclosures,

nancial position or performance when applied at

a future date. The Group intends to adopt these

standards when they become effective.

IFRS 9 Financial Instruments – Classication and

measurement

On 24 July 2014, the International Accounting

Standards Board (IASB) issued the nal version of

IFRS 9-Financial Instruments bringing together the

classication and measurement, impairment and

hedge accounting phases of the IASB’s project to

replace IAS 39 Financial Instruments: Recognition

and Measurement and all previous versions of IFRS

9. The classication and measurement requirements

address specic application issues arising in IFRS 9

(2009) that were raised by preparers, mainly f rom

the nancial services industry. The expected credit

loss model addresses concerns expressed following

the nancial crisis that entities recorded losses too

late under IAS 39.

IFRS 9 stipulates that nancial assets are measured

at amortised cost, fair value through prot or loss,

or fair value through other comprehensive income,

based on both the entity’s business model for

managing the nancial assets and the nancial

asset’s contractual cash ow characteristics. Apart

from the ‘own credit risk’ requirements, classication

and measurement of nancial liabilities is unchanged

from existing requirements. IFRS 9 is applicable

for annual periods beginning on or after 1 January

2018, but early adoption is permitted. The Group is

currently assessing the impact of IFRS 9.

IFRS 15 - Revenue from Contracts with Customers

The IASB has issued the joint revenue recognition

standard, IFRS 15 Revenue from Contracts with

Customers, which replaces all existing IFRS revenue

requirements. The core principle of IFRS 15 is that

revenue is recognised to depict the transfer of

promised goods or services to customers in an

amount that reects the consideration to which the

entity expects to be entitled in exchange for those

goods or services.

IFRS 15 establishes a ve-step model that will apply

to revenue earned from a contract with a customer

(with limited exceptions), regardless of the type of

revenue transaction or the industry. The standard’s

requirements will also apply to the recognition and

measurement of gains and losses on the sale of

some non-nancial assets that are not an output of

the entity’s ordinary activities (e.g. sales of property,

plant and equipment or intangibles). Extensive

disclosures will be required, including disaggregation

of total revenue; information about performance

obligations; changes in contract asset and liability

account balances between periods and key

judgements and estimates.

The standard is effective for annual pe riods

beginning on or after 1 January 2018, but early

adoption is permitted under IFRS. The Group is still

assessing the impact of the standard on its contracts

with customers.

IAS 1 Disclosure Initiative – Amendments to IAS 1

The amendments to IAS 1 Presentation of Financial

Statements clarify, rather than signicantly change,

existing IAS 1 requirements.

The amendments clarify:

• The materiality requirements in IAS 1

• That specic line items in the statement(s) of prot

or loss and OCI and the statement of nancial

position may be disaggregated

• That entities have exibility as to the order in which

they present the notes to nancial statements

• That the share of OCI of associates and joint

ventures accounted for using the equity method

must be presented in aggregate as a single line

item, and classied between those items that will

or will not be subsequently reclassied to prot

or loss. Furthermore, the amendments clarify the

requirements that apply when additional subtotals

are presented in the statement of n ancial position

and the statement(s) of prot or loss and OCI .

The standard is effective for annual pe riods

beginning on or after 1 January 2016, but early

adoption is permitted under IFRS.

These amendments are intended to assist entities in

applying judgement when meeting the presentation

and disclosure requirements in IFRS, and do not

affect recognition and measurement. Although these

amendments clarify existing requirements of IAS 1,

the clarications may facilitate enhanced disclosure

effectiveness.

IAS 16 and IAS 38 Clarications of Acceptable

Methods of Depreciation and Amortisation

The IASB issued amendments to IAS 16 Property,

Plant and Equipment and IAS 38 Intangible Assets

prohibiting the use of revenue-based depreciation

methods for xed assets and limiting the use of

revenue-based amortisation methods for intangible

assets. The amendments are effective prospectively.

The amendment becomes effective for annual

periods beginning on or after1 January 2016 and will

not have any impact on the Group as depreciation is

not based on revenue methods.

IAS 27 Equity Method in Separate Financial

Statements – Amendments to IAS 27

The amendments to IAS 27 Separate Financial

Statements allow an entity to use the equity method

as described in IAS 28 to account for its investments

in subsidiaries, joint ventures and associates in its

separate nancial statements. Therefore, an entity

must account for these investments either, at cost,

in accordance with IFRS 9 (or IAS 39) or using the

equity method. The entity must apply the same

accounting for each category of investment.

A consequential amendment was also made

to IFRS 1 First-time Adoption of International

Financial Reporting Standards. The amendment to

IFRS 1 allows a rst-time adopter accounting for

investments in the separate nancial statements

using the equity method, to apply the IFRS 1

exemption for past business combinations to the

acquisition of the investment.

Annual Improvements

In the 2012-2014 annual improvements cycle, the

IASB issued ve amendments to four standards.

The changes are effective 1 January 2016. Below is a

summary of the amendments that are applicable to

the group.

IFRS 5 Non-Current Assets Held for Sale and

Discontinued Operations - Changes in methods of

disposal

Assets (or disposal groups) are generally disposed

of either through sale or distribution to owners.

The amendment claries that changing from one

of these disposal methods to the other would not

be considered a new plan of disposal, rather it is a

continuation of the original plan. There is, the refore,

no interruption of the application of the requirements

in IFRS 5. The amendment does not have an impact

on the Group's Financials statements as there has

been no change in disposal methods.

IFRS 7 Financial Instruments - Servicing contracts

The amendment claries that a se rvicing contract

that includes a fee can constitute continuing

involvement in a nancial asset. An entity mus t

assess the nature of the fee and the arrangement

against the guidance for continuing involvement

in IFRS 7.B30 and IFRS 7.42C in order to assess

whether the disclosures are required.

The assessment of which servicing contracts

constitute continuing involvement must be done

retrospectively. However, the required disclosures

would not need to be provided for any period

beginning before the annual period in which th e

entity rst applies the amendment.

IFRS 7 Financial Instruments - Applicability of

the offsetting disclosures to condensed interim

nancial statements

The amendment claries that the offsetting

disclosure requirements do not apply to condensed

interim nancial statements, unless such disclosures

provide a signicant update to the information

reported in the most recent annual report. The

amendment must be applied retrospectively.

IAS 19 Employee Benets - Discount rate: regional

market issue

The amendment claries that market depth of high

quality corporate bonds is assessed based on the

currency in which the obligation is denominated,

rather than the country where the obligation

is located. When there is no deep market for

high quality corporate bonds in that currency,

government bond rates must be used. The

amendment must be applied prospectively.

IAS 34 Interim Financial Reporting - Disclosure

of information ‘elsewhere in the interim nancial

report

The amendment claries that the required interim

disclosures must be either in the interim nancial

statements or incorporated by cross-reference

between the interim nancial statements and

wherever they are included within the interim

nancial report (e.g. in the management commentary

or risk report).

The other information within the interim nancial

report must be available to users on the same

N O E S O H E C O N S O L I D A E DF I N A N C I A L S A E M E N S C O N I N U E D



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terms as the interim nancial statements and at

the same time. The amendment must be applied

retrospectively.

2.5 Summary of signicant accounting policies

2.5.1 Business Combinations

Business combinations are accounted for using

the acquisition method. The cost of an acquisition

is measured as the aggregate of the consideration

transferred, measured at acquisition date fair

value and the amount of any non-controlling

interest in the acquiree. For each busines s

combination, the Group elects to measure the

non-controlling interest in the acquiree either

at fair value or at the proportionate share of the

acquiree’s identiable net assets. Acquisition

costs incurred are expensed and included in

administrative expenses.

When the Group acquires a business, it assesses

the nancial assets and liabilities assumed for

appropriate classication and designation in

accordance with the contractual terms, economic

circumstances and pertinent conditions as at the

acquisition date This includes the separation of

embedded derivatives in host contracts by the

acquiree.

If the business combination is achieved in stages,

the acquisition date fair value of the acquirer’s

previously held equity interest in the acquiree is

remeasured to fair value at the acquisition date

through prot or loss.

Any contingent consideration to be transferred

by the acquirer will be recognised at fair value

at the acquisition date. Subsequent changes to

the fair value of the contingent consideration

which is deemed to be an ass et or liability

will be recognised in accordance with IAS 39

either in prot or loss or as a change to other

comprehensive income. If the contingent

consideration is classied as equity, it should not

be remeasured until it is nally settled within

equity.

Goodwill is initially measured at cost being the

excess of the aggregate of the consideration

transferred and the amount recognised for

non-controlling interest over the net identiable

assets acquired and liabilities assumed. If this

consideration is lower than the fair value of

the net assets of the subsidiary acquired, the

difference is recognised in prot or loss.

After initial recognition, goodwill is measured at

cost less any accumulated impairment losses.

For the purpose of impairment testing, goodwill

acquired in a business combination is, from the

acquisition date, allocated to each of the Group’s

cash generating units that are expected to be net

from the combination, irrespective of whether

other assets or liabilities of the acquiree are

assigned to those units.

Where goodwill forms part of a cash-generating

unit and part of the o peration within that unit

is disposed of, the goodwill associated with the

operation disposed of is included in the carrying

amount of the operation when determining the

gain or loss on disposal of the operation. Goodwill

disposed of in this circumstance is measured

based on the relative values of the operation

disposed of and the portion of the cash-

generating unit retained.

2.5.2 Foreign currency translation

The Group’s nancial statements are presented in

United States Dollars (US$), which is the Group’s

functional and presentation currency. Each

entity in the Group determines its own functional

currency and items included in the nancial

statements of each entity are measured using that

functional currency.

In preparing the nancial statements of the

individual entities, transactions in currencies

other than the entity’s functional currency

(foreign currencies) are recognised at the

rates of exchange prevailing at the dates of

the transactions. At the end of each reporting

period, monetary items denominated in foreign

currencies are retranslated at the rates prevailing

at that date. Non-monetary items carried at fair

value that are denominated in foreign currencies

are retranslated at the rates prevailing at the

date when the fair value was determined. Non-

monetary items that are measured in terms

of historical cost in a foreign currency are not

retranslated.

Exchange differences arising from translation or

settlement of monetary items are recognised in

prot or loss in the period in which they arise.

For the purpose of presenting consolidated

nancial statements, the assets and liabilities of

the Group’s foreign operations are expressed

in United States Dollars using exchange rates

prevailing at the end of the reporting period.

Income and expense items are translated at the

average exchange rates for the period, unless

exchange rates uctuated signicantly during that

period, in which case the exchange rates at th e

dates of the transactions are used.

Exchange differences arising, if any, are

recognised in other comprehensive income

and accumulated in equity (attributed to non-

controlling interests as appropriate). Upon

disinvestment of a foreign entity, translation

differences related to that entity are recycled into

prot or loss.

2.5.3 Taxes

2.5.3.1 Current income tax

Current tax assets and liabilities for the current

and prior periods are measured at the amount

expected to be recovered from or paid to the

taxation authorities. The tax rates and tax laws

used to compute the amount are those that are

enacted or substantively enacted by the en d of

the reporting period in countries where the Group

operates and generates taxable income.

Current income tax relating to items recognised

directly in other comprehensive income or equity

is recognised in other comprehensive income

or equity and not in prot or loss for the period.

Management periodically evaluates positions

taken in the tax returns with respect to situations

in which applicable tax regulations are subject to

interpretation and establishes provisions where

appropriate.

2.5.3.2 Deferred income tax

Deferred income tax is provided using the

liability method on all temporary differences

at the reporting date between the tax base of

assets or liabilities and their carrying amounts in

the statement of nancial position for nan cial

reporting purposes. Deferred income tax

liabilities are recognised for all taxable temporary

differences, except:

• where the deferred income tax liability arises

from the initial recognition of goo dwill or of

an asset or liability in a transaction that is not

a business combination and, at the time of th e

transaction, affects neither the accounting prot

nor taxable prot or loss; and

• in respect of taxable temporary differences

associated with investments in subsidiaries,

associates and interests in joint ventures, where

the timing of the reversal of the temporary

differences can be controlled and it is probable

that the temporary differences will not reverse in

the foreseeable future.

Deferred income tax assets are recognised for all

deductible temporary differences, carry forward

of unused tax credits and unused tax losses, to

the extent that it is probable that taxable prot

will be available against which the deductible

temporary differences, and the carry forward of

unused tax credits and unused tax losses can be

utilised except:

• where the deferred income tax asset relating to

the deductible temporary difference arises from

the initial recognition of an asset or liability in a

transaction that is not a business combination

and, at the time of the transaction, affects

neither the accounting prot nor taxable prot

or loss; and

• in respect of deductible temporary differences

associated with investments in subsidiaries,

associates and interests in joint ventures,

deferred income tax assets are recognised

only to the extent that it is probable that

the temporary differences will reverse in the

foreseeable future and taxable prot will

be available against which the temporary

differences can be utilised.

The carrying amount of deferred income tax

assets is reviewed at the end of ea ch reporting

period and reduced to the extent that it is no

longer probable that sufcient taxable prot will

be available to allow all or part of the deferred

income tax asset to be utilised. Unrecognised

deferred income tax assets are reassessed at the

end of each reporting period and are recognised

to the extent that it has become probable that

future taxable prot will allow the deferred tax

asset to be recovered.

Deferred taxation is recognised in prot or loss

except to the extent that it relates to items that

are recognized outside prot or loss (whether

in other comprehensive income or directly in

equity), in which case tax is also recognized

outside of prot or loss.

Deferred taxation relating to tax losses carried

forward is recognised to the extent that it

is probable that future taxable prot will be

available against which the unused tax losses can

be utilised.

Deferred tax assets and liabilities are measured

at the tax rates that are expected to apply to the

year when the asset is realised or the liability is

settled, based on tax rates (and tax laws) that

have been enacted or substantively enacted at

the end of the reporting period.




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Deferred tax assets and deferred income tax

liabilities are offset, only if a legally enforceable

right exists to set off current tax assets against

current income tax liabilities and the deferred

income taxes relate to the same taxable entity

and the same taxation authority.

2.5.3.3 Value Added Tax (VAT)

Revenues, expenses and assets are recognised

net of the amou nt of VAT except:

• where the VAT incurred on a purchase of assets

or services is not recoverable from the tax

authorities, in which case the VAT is recognised

as part of the cost of acquisition of the ass et or

as part of the expense item as applicable; and

• receivables and payables that are stated

with the amount of VAT included. The net

amount of VAT recoverable from, or payable

to, the taxation authority is included as part

of receivables or payables in the statement of

nancial position.

2.5.4 Non-current assets held for sale and

discontinued operations

Non-current assets and disposal groups classied

as held for sale are measured at the lower of their

carrying amounts and fair value less costs to sell.

Non-current assets and disposal groups are

classied as held for sale if their carrying amounts

will be recovered principally through a sale

transaction rather than through continuing use.

This condition is regarded as met only when the

sale is highly probable and the ass et or disposal

group is available for immediate sale in its present

condition. Management must be committed to

the sale, which should be expected to qualify for

recognition as a completed sale within one year

from the date of classication.

In the consolidated statement of prot or

loss and other comprehensive income of the

reporting period and the comparable period of

the previous year, income and expenses from

discontinued operations are reported separately

from income and expenses from continuing

operations, down to the level of prot af ter taxes,

even when the Group retains a n on-controlling

interest in the subsidiary after sale. The resulting

prot or loss (after taxes) is reported separately

in the statement of prot or loss and other

comprehensive income.

Property, plant and equipment and intangible

assets once classied as held for sale are not

depreciated or amortised.

2.5.5 Inventories

Inventories are stated at the lower of cost and

estimated net realisable value. Costs incurred in

bringing each product to its present location and

condition are accounted for as follows:

Raw materials:

• Purchase cost on a rst in, rst out basis.

Finished goods and work in progress:

• Cost of direct materials and labour and a

proportion of manufacturing overheads based

on normal operating capacity but excluding

borrowing costs.

In respect of the purchases of raw materials, net

realisable value is the estimated selling price in

the ordinary course of business, less estimated

costs of completion and the estimated costs

necessary to make the sale.

2.5.6 Leases

The determination of whether an arrangement

is, or contains a lease is based on the substance

of the arrangement at inception date based on

whether the fullment of the arrangement is

dependent on the use of a specic asset or assets

or the arrangement conveying the right to use the

asset.

Leases are classied as nance leases whenever

the terms of the lease transfer substantially

all the risks and rewards of ownership to the

lessee. All other leases are classied as operating

leases.

2.5.6.1 The Group as lessor

Rental income from operating leases is

recognised on a straight-line basis over the term

of the relevant lease. Initial direct costs incurred in

negotiating and arranging an operating lease are

added to the carrying amount of the leased asset

and recognised on a straight-line basis over the

lease term.

2.5.6.2 The Group as lessee

Finance leases which transfer to the Group

substantially all the risks and benets incidental to

ownership of the leased item are capitalized at the

commencement of the lease at the fair value of

the leased assets or, if lower, at the present value

of the minimum lease payments. Lease payments

are apportioned between nance charges and

reduction of the lease liability so as to achieve a

constant rate of interest on the remaining balance

of the liability. Finance charges are recognised in

nance costs in prot or loss.

Operating lease payments are recognised as an

expense on a straight-line basis over the lease

term, except where another systematic basis is

more representative of the time pattern in which

economic benets from the leased asset are

consumed.

2.5.7 Provisions

Provisions are recognised when the Group has

a present obligation (legal or constructive) as

a result of a past event, it is probable that the

Group will be required to settle the obligation,

and a reliable estimate can be made of the

amount of the obligation.

The amount recognised as a provision is the

best estimate of the consideration required to

settle the present obligation at the end of the

reporting period, taking into account the risks

and uncertainties surrounding the obligation.

Where a provision is measured using the cash

ows estimated to settle the present obligation,

its carrying amount is the present value of those

cash ows.

When some or all of the economic benets

required to settle a provision are expected to

be recovered from a third party, a receivable is

recognised as an asset if it is vir tually certain that

reimbursement will be received and the amount

of the receivable can be measured reliably.

2.5.8 Retirement benets

Retirement benets are provided for eligible

Group employees through various independently

administered dened contribution schemes,

including the National Social Security Authority.

Contributions to these funds are recognised as

an expense in the period to which employees’

services relate.

2.5.9 Property, plant and equipment

All items of property, plant and equipment are

shown at cost less accumulated depreciation

and accumulated impairment losses, if any.

Cost includes expenditures that are directly

attributable to the acquisition of the asset.

Land is carried at cost whereas buildings are

carried at cost less accumulated depreciation

and accumulated impairment losses. The assets’

residual values and useful lives are reviewed,

and adjusted if appropriate, at the end of each

reporting period.

No depreciation is provided on land or capital

work-in-progress. Depreciation commences when

the asset is available for use. Other xed assets

are depreciated on a straight line basis, at such

rates as are considered appropriate to reduce

their book values to residual values over their

estimated useful lives, as follows:

• Buildings 40 years

• Productive plant and machinery 8 - 20 years

• Ancillary machinery, equipment and furniture 3

-10 years

• Motor vehicles 5 - 10 years

The assets’ residual values, useful lives and

methods of depreciation are reviewed at each

nancial year end and adjusted prospectively

if appropriate. The carrying values of plant an d

equipment are reviewed for impairment when

events or changes in circumstances indicate that

the carrying value may not be recoverable in full.

An item of property, plant and equipment is

derecognised upon disposal or when no future

economic benets are expected from its use or

disposal. Any gain or loss arising on derecognition

of the asset (calculated as the difference between

the net disposal proceeds and the carrying

amount of the asset) is included in prot or loss in

the year the asset is derecognised.

2.5.10 Revenue recognition

Revenue is recognised to the extent that it is

probable that the economic benets will ow

to the Group and the revenue can be reliably

measured.

Revenue is measured at the fair value of the

consideration received/receivable net of

discounts, rebates, VAT and other taxes or duty.

Intra-group revenue, which arises in the normal

course of business is excluded from revenue. The

following specic recognition criteria must also be

met before revenue is recognised:

2.5.10.1 Sale of goods

Revenue from the sale of goods is recognised

when the signicant risks and rewards of

ownership of the goods have passed to the buyer,

usually on delivery of the goods.

2.5.10.2 Rental income

Rental income arising from operating leases on

properties is accounted for on a straight line basis

over the lease terms.

2.5.10. 3 Dividend and interest income




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Dividend revenue from investments is recognised

when the shareholder’s right to receive payment

has been established (provided that it is probable

that the economic benets will ow to the Group

and the amount of revenue can be measured

reliably).

Interest income is recognised when it is probable

that the economic benets will ow to the Group

and the amount of revenue can be measured

reliably. Interest income is accrued on a time

basis, by reference to the principal outstanding

and at the effective interest rate applicable, which

is the rate that exactly discounts estimated future

cash receipts through the expected life of the

nancial asset to that asset’s net carrying amount

on initial recognition.

2.5.11 Borrowing costs

Borrowing costs that are directly attributable to

the acquisition, construction or production of a

qualifying asset shall be capitalised as part of the

cost of that asset. A qualifying asset is an asset

that necessarily takes a substantial period of time

to get ready for its intended use or sale. All other

borrowing costs are recognised in prot or loss in

the period in which they are incurred. Borrowing

costs consist of interest and other costs that the

Group incurs in connection with the borrowing of

funds.

2.5.12 Impairment of non-nancial assets

The Group assesses at each reporting date

whether there is an indication that an asset

may be impaired. If any such indication exists,

or when annual impairment testing for an asset

is required, the Group makes an estimate of

the asset’s recoverable amount. An asset’s

recoverable amount is the higher of an asset ’s

or cash-generating unit’s fair value less costs of

disposal and its value in use and is determined

for an individual asset, unless the asset does

not generate cash inows that are largely

independent of those from other assets or groups

of assets. Where the carrying amount of an asset

exceeds its recoverable amount, the asset is

considered impaired and is written down to its

recoverable amount. In assessing value in use,

the estimated future cash ows are discounted

to their present value using a pre-tax discount

rate that reects current market assessments of

the time value of money and the risks specic to

the asset. In determining fair value less costs of

disposal, an appropriate valuation model is used.

Impairment losses of continuing operations are

recognised in prot or loss in those expense

categories consistent with the function of the

impaired asset.

An assessment is made at each reporting

date as to whether

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